SXSW: Snocapping it off

One thing was apparent at South by Southwest this year: Even though the interactive festival ended and then the music festival began, the two are growing more and more intertwined than ever. (And the film festival is very much a part of both of them.)

It’s a testament to how technology is increasingly worming its way into all facets of life, but particularly into culture and entertainment. The film and interactive festivals had several concurrent panels, as people in the film industry are learning how to put their wares online, and the music festival also featured panel discussions on the disruptive nature of technology.

On my last day in Austin, I had breakfast with Rusty Rueff, the chief executive of San Francisco’s Snocap. Snocap has set up a digital registry and is about to pass iTunes, with 3.3 million songs in its registry. It is now using that registry to set up online stores for musicians on MySpace and other sites.

Rueff, 44, a former Electronic Arts executive, was excited that earlier in the week, Snocap had inked its first deals with some of the top indie labels under the Warner Music Group umbrella, Sub Pop, New Line and Dangerbird. He saw it as a sign that the major labels would come around and release their music in the MP3 format.

“We’re very good friends with the major labels,” Rueff said.

Well, that sounded like an opening. After all, Snocap’s founder and board member, Shawn Fanning, was the labels’ enemy number one a few years ago when he founded Napster, the site that enabled people to share music without paying the labels a penny.

The labels must love Shawn, I said.

“They do love Shawn,” Rueff said. “The day after Napster shut down, he started Snocap to work on behalf of the rights holders.”

Rueff is positioning Snocap as a way for peer-to-peer networks to go legitimate, as well as for the labels to move away from the one-price-fits-all of Apple’s 99 cent iTunes store. Snocap allows variable pricing, and some rappers have even sold their beat tracks for $500.

Rueff said Fanning is now 26, and is mostly working onRupture, a virtual social community built around games, like World of Warcraft. Famed angel investor Ron Conway is backing both Snocap and Rupture, which is also in San Francisco.

“Shawn was not a pirate,” Rueff said. “There are people who are pirates, who are purposefully running illegal services, moving their servers around the world. That was not Shawn. From the beginning, Shawn wanted to get the technology out….

“Napster was the first social network. You could see what people were doing and you could see into their hard drive. The technology was about sharing and connecting. It used music because music was ubiquitous…”

The labels were suspicious of Fanning when Snocap launched, Rueff said. “The first time he went into their office, it was not like, ‘Oh, I’m going to give you a hug,'” he said. “But over time, they saw Shawn’s intent was the right one.”

It still sounds like Snocap could cause problems for the labels, in that Rueff says it helps connect artists directly with fans. Who needs the middleman then? Rueff said that’s not the question. The labels perform a vital role in helping artists get big.